[Jun 2024] Fees are high, wait for opportunity to Consolidate your small inputs

[philipma1957]

I think that that's more of a loss than an evidence that it works (DoS protection and a self-sustainability assurance mechanism).

That's your opinion, and it's totally respected. As I said, in my opinion, it's more preferable to have that undoubtedly big loss than risk destroying this beautiful concept in 20 years from now.

To me, it looks like advocating for an extremely high house prices while not being able to afford a house.

Sounds reasonable if the people who build the houses must continue building and selling them, no matter what, or all houses disappear. I don't want a large mansion for a few thousand dollars if I risk having it gone.

I respect your opinion too but I simply don't understand why you advocate it when there are so many cons. It's simple, if Bitcoin transaction fees will remain high, people won't use it. The less people use Bitcoin, the less there will be a need of it as a payment method which leads to less adoption. Less activity will result in the death of Bitcoin as a payment method, at least. Less activity on Bitcoin will also promote alternative cryptocurrencies and I won't be surprised if any altcoin will take the first place on the market.
If block size won't increase, there will be no space for new customers who want to make Bitcoin transactions daily and there are billions of people on earth. 600K daily transactions that we see on Blockchain, is really nothing for such a big population. Block size limit is the limit of how many people will be able to use Bitcoin. If we want massive adoption in forms of payment and protection from DDOS, a new model is necessary. At the moment, a slight block size increase is necessary, we can't have 1 MB or 4 MB block size in 2024, the technology has advanced, RAM, CPU, GPU, SSD, everything is significantly more powerful than in 2009 and significantly affordable.

To be honest, I don't understand why should I use a 2nd layer solution. If anyone has to use 2nd layer (I don't mean LN exactly), it's ordinals and runes spammers. Normal users, who want to use Bitcoin as a p2p payment method, should be able to use Bitcoin as it is without 2nd and 3rd layers.

Well remember if they have a direct deal with foundry (biggest pool) they could get a fee kickback.

That's what I think, it became a too dirty deal. I even think that ordinals and runes creators work with big mining pools to artificially increase the transaction fee. The scheme should be this: Some people inscribe ordinals and runes, pay extremely high transaction fees (then get all the fees back from pools), increase the transaction fee for everyone, they scam people with dumb ape and other JPEGs and that's all. They make money from creating and selling tons of ordinals, miners make money from increased transaction fees. I have no other explanation because I have seen many posts when NFT creators where crying for increased ETH transaction fees and now they want to pay thousands of dollars on Bitcoin blockchain? Doesn't make sense.

I have been saying this for years.

[Dump3er]

And on top of that the whhole centralized infrastructure is getting sucked in as well. If someone holds small amounts on an exchange or wants to withdraw a few bucks from an online casino, essentially not possible as they raise the fees through the roof, too.

If the coinbase transaction decreases further, obviously the incentive to raise fees artificially is getting stronger and stronger, thereby reducing the potential use base in return.

Is this a dilemma that may not be reasonably solvable? I just don't see how bitcoin can keep its level of security for the big wealth that is getting stored on the blockchain when it is not at the cost of all the smaller use cases.

[BlackHatCoiner]

If the coinbase transaction decreases further, obviously the incentive to raise fees artificially is getting stronger and stronger, thereby reducing the potential use base in return.

There is nobody raising the fees apart from the natural law of demand and supply. A mining pool can decide to not mine any transaction paying less than 10 sat/vb as a policy of theirs, but these transactions will eventually be mined by other mining pools that don't like throwing their income to their competitors.

Is this a dilemma that may not be reasonably solvable?

The problem is simple: You need to ensure those securing the chain will always have the incentive to do so, and the only ways to practically accomplish it is either by relying on transaction fees, or by subsidies. Bitcoin is capped at 21 million, therefore it has to rely on transaction fees. This means that being congested should be embraced, not criticized.

[icopress]

I paid $760 for a transaction yesterday, sending bitcoins using TrustWallet.

This wallet offered me the default commission size, and I was stupid enough not to double-check the information (although I always do this in Electrum and other wallets). At that second I thought that TrustWallet should set the optimal commission according to the mempool, but now I started to think that these bastards are in cahoots with the mining pools since they offer users commissions of crazy size by default.

This was the last day I used TrustWallet  

[BlackHatCoiner]

Really bad decision to use TrustWallet. The red flag is in the name.

Sorry for your loss.

[Synchronice]

This is precisely my point. If we are billions, then we can't all fit by making on-chain transactions on a daily basis. This is true for 4 MB blocks as much as it is for 40, or for 400 MB. It is only a matter of time before these sizes become considered insufficient as well, and we need to go even higher than that.

And this is the good scenario. For if the adoption (or demand for on-chain transactions) does not follow the block's capacity increase, then the network will not be sufficiently self-sustainable.

Then adaptive block size is the answer. To be honest, I think that Monero is what many Bitcoin enthusiasts and supporters want Bitcoin to be. Maybe it's time to migrate to Monero?

"Should" is a complex and problematic verb. One person's actions impact another. If you think about it, your transaction occupies the space another person could use. It might sound exaggerated, but your freedom to make on-chain transactions directly influences another person's freedom to do the same. Just because something is considered a "human right" or "privilege" doesn't mean it comes without a cost. Dictate who should bear that cost, and you've essentially created a government.

Second layer solutions aim to minimize your influence on others' freedom as much as possible. That is the goal, in my view.

Bitcoin is a peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another. The aim of Satoshi was to create a non-reversible transactions without a trusted party. The main idea of Bitcoin also was to keep low transaction costs. I am quoting the whitepaper. I have read whitepaper and it looks like Ordinals completely ruin the Bitcoin. Yes, freedom is good and there is nothing wrong with it but Ordinals clearly abuse Bitcoin and use it for purposes that were never meant. Bitcoin was created to send money, not JPEGs, so I think we are still in the frames of freedom even if we ruin the Ordinals party.
I completely understand your opinion but Ordinals ruin our freedom, not us - theirs. If anyone wants to send 1 cent but pay thousands of dollars in transaction fees, then they are welcome, it's their choice, their freedom and free will but Ordinals don't do that, they send the ownership of JPEG files, not money. That's why I am against them.

I paid $760 for a transaction yesterday, sending bitcoins using TrustWallet.

This wallet offered me the default commission size, and I was stupid enough not to double-check the information (although I always do this in Electrum and other wallets). At that second I thought that TrustWallet should set the optimal commission according to the mempool, but now I started to think that these bastards are in cahoots with the mining pools since they offer users commissions of crazy size by default.

This was the last day I used TrustWallet  

Binance owns Trust wallet, Binance owns Binance pool and collaborates with other leading mining pools, so high transaction fees are their interest. At the same time, keep in mind that Binance does many shady things, for example, on Binance, it's cheaper to withdraw Bitcoin to legacy address compared to SegWit address. Does this make any sense? No! They also do every dirty job to promote their own chain.

Really bad decision to use TrustWallet. The red flag is in the name.

Sorry for your loss.

Exactly! The red flag is in their names:
TrustWallet - UnTrustWorthyWallet
Craig Wright - Craig Wrong

[nakamura12]

I paid $760 for a transaction yesterday, sending bitcoins using TrustWallet.

This wallet offered me the default commission size, and I was stupid enough not to double-check the information (although I always do this in Electrum and other wallets). At that second I thought that TrustWallet should set the optimal commission according to the mempool, but now I started to think that these bastards are in cahoots with the mining pools since they offer users commissions of crazy size by default.

This was the last day I used TrustWallet  

It seems that way, I have been using trustwallet before and they've been like that for a long time already where the default fee that will be sent will always be higher than the transaction fee that we see in mempool.

[Dump3er]

This is precisely my point. If we are billions, then we can't all fit by making on-chain transactions on a daily basis. This is true for 4 MB blocks as much as it is for 40, or for 400 MB. It is only a matter of time before these sizes become considered insufficient as well, and we need to go even higher than that.

And this is the good scenario. For if the adoption (or demand for on-chain transactions) does not follow the block's capacity increase, then the network will not be sufficiently self-sustainable.

Then adaptive block size is the answer. To be honest, I think that Monero is what many Bitcoin enthusiasts and supporters want Bitcoin to be. Maybe it's time to migrate to Monero?

Who is the voter, who gets to decide whether to shrink or expand the block size at a given time? I would assume it is the miners, but what would the miners incentive be to expand the block size? I guess it is the sweet spot where resource expenditure divided by the number of transactions lead to the economic optimum. But when we get to the point where the coinbase transaction is getting closer to zero, it might be against what bitcoin was intended to achieve. It will forever be a good place to store value for the very rich because they don't care about the fees. But the network would certainly not be incluse on a global scale.

How dynmaic would or could these adaptive block sizes be?

"Should" is a complex and problematic verb. One person's actions impact another. If you think about it, your transaction occupies the space another person could use. It might sound exaggerated, but your freedom to make on-chain transactions directly influences another person's freedom to do the same. Just because something is considered a "human right" or "privilege" doesn't mean it comes without a cost. Dictate who should bear that cost, and you've essentially created a government.

Second layer solutions aim to minimize your influence on others' freedom as much as possible. That is the goal, in my view.

That's what I think, too. Second layer solutions are similar to small communities having their own required level of security as the number of nodes facilitating/validating those transactions is smaller in a local community than it is on a global scale so to say. But a local community might not require the same level of security whereas someone sending $100 million from A to B wants the highest level of security possible, hence goes for a base layer transaction and pays a fortune in fees, which in relation to the amount transacted is irrelevant again. It wouldn't be the same with adaptive block sizes I think.

Exactly! The red flag is in their names:
TrustWallet - UnTrustWorthyWallet
Craig Wright - Craig Wrong

That was a good one about our beloved Crack Wright!


Edit: and I am wondering what the backlashes could be of adaptive block sizes and whether there will only be issues once we get to see it in action. Comparing BTC to XMR now is a bit difficult to say the least. BTC is about 290 times the transaction volume of XMR as of now. The idea sounds compelling at first, but it may not be the solution to problems that can't fully be anticipated now. Ordinals only became a problem that everyone fully understood once this insane volume (or number of transactions) was generated with them.

[philipma1957]

The biggest issue I see for BTC is LTC/Doge is better for small money transfers.

I am not sure what will happen in 10 years. But LTC/Doge is designed to last longer for money transfers under say $500 then BTC is.

But wait what about LN for btc.

Answer both LTC and Doge can do a version of LN.



So I think a constant pressure to attack BTC will continue because big money people see what I see.

[BlackHatCoiner]

Then adaptive block size is the answer. To be honest, I think that Monero is what many Bitcoin enthusiasts and supporters want Bitcoin to be. Maybe it's time to migrate to Monero?

Since privacy is one of the most important principles of the ancestors of Bitcoin, I'd have to say yes. Monero does better what Bitcoin was envisioned to become; peer-to-peer cash.

Unfortunately, the dynamical block size is neither the answer. It's just another temporary solution. It can render the system dysfunctional. See what happened last March in Monero: https://monero.observer/monero-daily-transaction-new-ath-100k/. A single spam attack might not seem of significant matter right now, but if you're running a node (as you should), it takes a decent time to verify those 100k transactions. And consider that if more people join, it no longer becomes "spam". It's regular transactions that slow down verification.

And since there's a dynamical block size, imagine what can happen if an attacker with a decent amount of money (dynamical size -> cheap fees), actually executes a spam attack for many months.

The aim of Satoshi was to create a non-reversible transactions without a trusted party. The main idea of Bitcoin also was to keep low transaction costs. I am quoting the whitepaper.

Which part of the whitepaper talks about "low fees"?

Yes, freedom is good and there is nothing wrong with it but Ordinals clearly abuse Bitcoin and use it for purposes that were never meant.

Centralized exchanges abuse Bitcoin, as it was meant to be peer-to-peer cash without trusted third parties. So, let's ban centralized exchanges.

Do you get it now?

[Dump3er]

Then adaptive block size is the answer. To be honest, I think that Monero is what many Bitcoin enthusiasts and supporters want Bitcoin to be. Maybe it's time to migrate to Monero?

Since privacy is one of the most important principles of the ancestors of Bitcoin, I'd have to say yes. Monero does better what Bitcoin was envisioned to become; peer-to-peer cash.

Unfortunately, the dynamical block size is neither the answer. It's just another temporary solution. It can render the system dysfunctional. See what happened last March in Monero: https://monero.observer/monero-daily-transaction-new-ath-100k/. A single spam attack might not seem of significant matter right now, but if you're running a node (as you should), it takes a decent time to verify those 100k transactions. And consider that if more people join, it no longer becomes "spam". It's regular transactions that slow down verification.

And since there's a dynamical block size, imagine what can happen if an attacker with a decent amount of money (dynamical size -> cheap fees), actually executes a spam attack for many months.

Referring to this explanation

So how can Monero have dynamic blocksizes but avoid spam attacks? The answer is simple, but clever. A penalty on the block reward is introduced when a block is bigger than normal. If a miner wants to increase the blocksize, the reward they get from finding that block will be less than they would otherwise receive. So they will only increase the blocksize when the paid transaction fees of the users outweigh the lost portion of the block reward. For example, if the miner would lose 0.5 XMR by raising the block size, and the sum of the paid transaction fees would be 0.4 XMR, then there would be a net loss of 0.1 XMR if they were to raise the size, so they wouldn’t do it. Conversely, if the total transaction fees added up to 0.7 XMR, then there would be a net gain of 0.2 XMR, even though they lose the 0.5 XMR from the block reward penalty, so the miner will increase the size.

It would be nice if someone has some input here because I can't tell whether a block reward penalty would really solve the problem at scale. I can't wrap my head around it as I feel too stupid to see what other problems could occur if Monero had $30 billion transaction volume a day and gets spammed like there is no tomorrow. My interpretation then would be that bigger block sizes will lead to less miners participating in the process --> more centralization, less security. Even further, with a dynamic block size, mining companies with loads of cash in the bank could decide to spam the network for a long enough period of time to kick out more competitors, that way opening up a plethora of non-desirable competition among miners. My guess here would be that the block reward penalty does only work hypothetically for smaller networks as the scenario where the block reward gives less to the miners than the tx fees will hardly ever happen. In larger networks tx fees are more likely to outcompete coinbase rewards, which could then lead to the centralization problem and spamming incentive by large mining operations as I described above.

The aim of Satoshi was to create a non-reversible transactions without a trusted party. The main idea of Bitcoin also was to keep low transaction costs. I am quoting the whitepaper.

Which part of the whitepaper talks about "low fees"?

Yes, freedom is good and there is nothing wrong with it but Ordinals clearly abuse Bitcoin and use it for purposes that were never meant.

Centralized exchanges abuse Bitcoin, as it was meant to be peer-to-peer cash without trusted third parties. So, let's ban centralized exchanges.

Do you get it now?

Ordinals - as is correctly said here - do not technically abuse Bitcoin. One of the most important principles Bitcoin is based on is censorship-resistance. Whatever Satoshi thought Bitcoin would be used for and at what scale, I think it would go much too far to believe that Satoshi was able to anticipate any single angle Bitcoin could take or would be used for. The difference with Ordinals is that someone can spam the network and others can't use it. With exchanges these mutual effects don't exist. We can just decide to not use them. I am quite sure that there is more stuff coming for Bitcoin in the next few years that nobody has yet thought about.

[BlackHatCoiner]

It would be nice if someone has some input here because I can't tell whether a block reward penalty would really solve the problem at scale.

It doesn't solve the problem. Block reward penalty applies to the block subsidy, and it is really negligible with only 0.6 XMR as subsidy. With Monero transactions sized at at least a few kilobytes, it only takes a few hundred transactions to incentivize the miner to burn the subsidy; it only takes 600 transactions paying 0.001 XMR each (which is essentially nothing). In an envisioned global adoption, the system should be able to handle more than 600,000 per 2.5 minutes, let alone 600. Your Monero client would need to verify 4000 transactions per second, which is infeasible.

The difference with Ordinals is that someone can spam the network and others can't use it.

Others can use it; they simply pay a higher price. This distinction is significant. Bitcoin relies on the assumption that there will always people who will compete for an on-chain price. The solution is not to censor your fellow users, but to work on scaling.

[Pmalek]

This was the last day I used TrustWallet  

Good! Unfortunately, you had to suffer a financial loss to do it, but it's good that you decided to abandon it. There have been several issues with Trust Wallet recently, and anyone serious about bitcoin should really stay away from it. I have read stories about coins disappearing, people not being able to send them despite setting appropriate fees, random error messages here and there. It's a bad wallet.

[Dump3er]

I paid $760 for a transaction yesterday, sending bitcoins using TrustWallet.

This wallet offered me the default commission size, and I was stupid enough not to double-check the information (although I always do this in Electrum and other wallets). At that second I thought that TrustWallet should set the optimal commission according to the mempool, but now I started to think that these bastards are in cahoots with the mining pools since they offer users commissions of crazy size by default.

This was the last day I used TrustWallet  

What would the fees have been if you didn't get this wrong? Were it tons of outputs?

But $760 sounds nasty, life goes on though!

[Synchronice]

Which part of the whitepaper talks about "low fees"?

I assume, these quotes basically mean that Satoshi wanted Bitcoin transactions to cost low.

Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes. The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions,
and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services.

These costs and payment uncertainties
can be avoided in person by using physical currency, but no mechanism exists to make payments
over a communications channel without a trusted party

Yes, freedom is good and there is nothing wrong with it but Ordinals clearly abuse Bitcoin and use it for purposes that were never meant.

Centralized exchanges abuse Bitcoin, as it was meant to be peer-to-peer cash without trusted third parties. So, let's ban centralized exchanges.

Do you get it now?

o_e_l_e_o asked me this question and it really lingered in the back of my mind. Centralized exchanges don't abuse Bitcoin on a protocol level. You send Bitcoin from your address to another address, this is perfectly legit and doesn't abuse anything while ordinals send images. You can't ban centralized exchanges, that's impossible, you can't prohibit someone from getting coins from multiple people. I, as an individual, can basically ask you to send me coins to my address, send me KYC documents and then I'll offer you to exchange crypto with me. If I do it with thousands of people, I'm basically becoming a centralized exchange. It's impossible to block centralization but on the other hand, do you notice how centralized exchanges remove Monero from listings? That's why I am saying that Monero is everything that people want Bitcoin to be.

Mempool is probably cursed If there is not a spam of ordinals, there is a spam of UTXO consolidations. Blocks are full of huge transactions. Basically each transaction comes with more than 1000 inputs

[BlackHatCoiner]

I assume, these quotes basically mean that Satoshi wanted Bitcoin transactions to cost low.

From these quotes I understand that Satoshi wanted to convey that the costs of mediation and the oligopoly of financial institutions is what makes micro-transactions impractical. You must have noticed as well that some merchants will hesitate to accept card payments for a soda drink or cigarettes. The cost of the transaction fees may significantly cut into or even exceed the profit margin on such low-cost items.

However, if we take into consideration the fact that Satoshi was thinking of the blockchain growing by 100 GB every day, then it's probably plausible to assume he'd envision cheap on-chain transactions. As I have mentioned before, Satoshi is not the ideal figure to be regarded as the unquestionable authority or ultimate arbiter of truth for Bitcoin.

You send Bitcoin from your address to another address, this is perfectly legit and doesn't abuse anything while ordinals send images.

And Ordinals send dust from one address to another, which is perfectly legal from the protocol's perspective. They don't abuse anything.

You can't ban centralized exchanges, that's impossible, you can't prohibit someone from getting coins from multiple people.

You can neither prohibit someone from using the blockchain as a storage.

[LoyceV]

However, if we take into consideration the fact that Satoshi was thinking of the blockchain growing by 100 GB every day, then it's probably plausible to assume he'd envision cheap on-chain transactions. As I have mentioned before, Satoshi is not the ideal figure to be regarded as the unquestionable authority or ultimate arbiter of truth for Bitcoin.

I assumed that 100 GB per day was meant to be further in the future. But just imagine that: that's about 500 million Bitcoin transactions per day, which would mean mass adoption has been reached.

some merchants will hesitate to accept card payments for a soda drink

It's funny you mention that: here, it's the opposite. More and more merchants including government institutions refuse cash, and only accept card payments. We're a debit card country though, so fees are a lot less than with creditcards.

[BlackHatCoiner]

I assumed that 100 GB per day was meant to be further in the future. But just imagine that: that's about 500 million Bitcoin transactions per day, which would mean mass adoption has been reached.

Or a few spammers who want to store 4k movies on-chain. With 700 MB block clearing up the mempool every 10 minutes, you could store gigabytes of movies for a nickle.

It's funny you mention that: here, it's the opposite. More and more merchants including government institutions refuse cash, and only accept card payments. We're a debit card country though, so fees are a lot less than with creditcards.

In my place, they do hate it when you're asking to pay with card for anything lower than 5€. They'll find an excuse that their POS is broken, and accept only cash for the moment.

Edit: 12 sat/vb high priority, consolidate!

[cryptosize]

You must have noticed as well that some merchants will hesitate to accept card payments for a soda drink or cigarettes. The cost of the transaction fees may significantly cut into or even exceed the profit margin on such low-cost items.

In my place, they do hate it when you're asking to pay with card for anything lower than 5€. They'll find an excuse that their POS is broken, and accept only cash for the moment.

There is a legislation that says card payments up to €10 should only charge 0,5% fees. Some banks have already implemented it.

For example, one coffee that costs €2,00 is only going to pay €0,01 fee. Is that a lot?

As a merchant in a competitive economy (tons of take-away cafeterias) is it worth losing a potential income of €1,99, just because you're greedy and you want €2,00?

Many tourists prefer using cards (especially Revolut for zero exchange rate fees), so you're going to lose lots of money if you don't accept POS payments.

So even if the government hadn't imposed POS payments, it makes sense to accept them voluntarily.

0,5% loss is nothing if you take into account that BTC can easily go +5% in a single day. Of course it can also go -5%, but long-term wise we all know it can go a lot higher than that.

So if you're smart enough (spoiler alert: most people/merchants aren't), it totally makes sense to convert your fiat income into BTC on a daily basis.

Cards aren't the real danger, CBDC is for reasons I have explained many times before, so I won't repeat myself.

Try this experiment next time after wanting to buy something:

- Hello sir/madame, do you accept Bitcoin?

- No, I don't.

- Oh, too bad, I'll pay with a card then!

There is a small chance (1-2%) that they may ask you what Bitcoin is and how they could potentially accept it in their shop...

You may even attract their interest even more if you tell them that Bitcoin charges zero fees for the recipient (merchant), only the client pays fees (could be zero with LN).

That's just a simple way to spread the orange pill with minimal effort. (bonus: small talk hones your social skills)

[LoyceV]

I assumed that 100 GB per day was meant to be further in the future. But just imagine that: that's about 500 million Bitcoin transactions per day, which would mean mass adoption has been reached.

Or a few spammers who want to store 4k movies on-chain. With 700 MB block clearing up the mempool every 10 minutes, you could store gigabytes of movies for a nickle.

With the minimum of 1 sat/byte, storing movies would still cost $650,000 per GB at current Bitcoin price.

In my place, they do hate it when you're asking to pay with card for anything lower than 5€. They'll find an excuse that their POS is broken, and accept only cash for the moment.

Here, banks charge up to 0.5% or more to deposit cash (coins), and €0.50 per roll of coins if you need them.

As a merchant in a competitive economy (tons of take-away cafeterias) is it worth losing a potential income of €1,99, just because you're greedy and you want €2,00?

Could it be the €2 is off the books and won't get taxed, while the €1.99 is handled officially?